McDonald's Japan doubles estimates

(Reuters) -- McDonald's Holdings Co. (Japan) Ltd., the nation's top restaurant chain, doubled its earnings estimate for the half year on Tuesday, citing some improvement in the number of clients and their spending.

The revision came less than a month after the Tokyo-based firm, almost 50 percent owned by the world's largest restaurant company, McDonald's Corp., slashed its half-year earnings estimate by 87 percent after the launch of a lower-priced menu increased traffic but prompted consumers to spend less.

The Japanese unit now estimates its group net profit at 474 million yen ($4.2 million) for the six months ended last month, up from its previous forecast of 237 million yen.

That would still be less than half of its actual year-ago profit of 1.12 billion yen.

To attract more customers, the Japanese unit introduced a new one-coin menu in April that priced popular products like cheeseburgers at 100 yen or meal deals at 500 yen.

The company had expected the lower prices to boost customer traffic and to prompt customers to spend more on higher-priced products such as chicken nuggets and its mainstay Big Mac burgers, but the strategy backfired as customers spent less.

But the fallout seems to be less than the company feared in mid-June, when it estimated sales would fall 2.7 percent in the half year at shops open for more than one year.

Same-store sales actually fell by only 0.4 percent for the six-month period, a company spokesman said.

The company maintained its full-year earnings estimate at 3.55 billion yen, down from 3.68 billion yen a year ago. This compared with a consensus estimate of 3.1 billion yen according to a Reuters Estimate poll of five analysts.

Prior to the announcement, shares in the company ended the Tokyo session flat at 2,225 yen, against a 0.14 percent gain in the Tokyo market's food subindex.